DISCLAIMER.These Guidelines are intended to give information, in
simple terms, to help British pensioners to negotiate the minefield of
legislation in Britain, Australia and other countries, where the British
Government freezes pensions payable to those Nationals who have chosen to live
abroad.

We trust that the information
we offer will assist British residents overseas, who are either already
pensioners, or who are nearing the date when they will become pensioners, to
obtain the best possible financial future. The information we provide is not definitive and the final outcome
of any personal investigation must be resolved by negotiation with the
Department for Work & Pensions, and the equivalent body in the country in which
you have chosen to reside.

If you are a migrant from
Britain or worked in the UK, then provided that you paid full rate National Insurance
contributions you are probably entitled to a British Age Pension. Pensionable
age is 65 for men and 60 for Women, but the pension age for women is rising
gradually to equal that for men. Once the retirement age for women reaches 65 it
will start to rise for both sexes.

Note: membership of the NIF is
deemed to have started at age 16. There are special provisions for people who
spent time out of the work force.

To start the process of
enquiring about your pension rights, click here
Pension entitlement form and follow the instructions.

Category A Basic Retirement
Pension

If you reached retirement age
before 6 April 2010 you will be subject to the old rules. If you reached
retirement age on or after 6 April 2010 you will benefit from the new rules.

New Rules

To qualify for a full (100%)
Basic pension you must have contributed for 30 years or more. Each qualifying
year gives you 1/30th of the basic pension. You can get a part pension even if
you contributed for only 3 years. Current proposals will increase this minimum
to 10 years. But you may be allowed to catch up by paying voluntary
contributions.

Old Rules

To qualify for a full (100%) Basic pension you
must have contributed for most of your working life from age 16. The minimum
pension payable is 25% of the standard rate, based on years of contribution,
with a minimum of 11 years for men and 10 years for women. If your contribution
record is less than this, you may not be eligible for any UK pension.

For each additional contribution year the
percentage rises by 2% or 3% up to the maximum of 100%. Periods in which you did
not contribute may nevertheless count as contribution years, earning you a
higher percentage. Among such periods are those during which you may have lived
and worked in a European Union country, periods of sickness, periods when you
were allowed to be out of the work force because of home responsibilities and,
of course, any periods in the armed services.

If you have not yet reached Pensionable age,
you may be able to pay voluntary contributions, thus increasing your Basic
pension.

It is beyond the scope of this
guideline to list all the conditions. For details, contact the Department of
Work and Pensions.

Category B Retirement Pension

An additional pension for the wife or husband
of a pensioner is called a "category B pension". It can also be paid to widows
and widowers. For details, jump to A pension for the wife

It does not matter if the spouse is not British
and has never been or worked in the UK.

It has been reported to us that the DWP does
not always tell people that a category B pension is possible.

If they have let you down (not
an uncommon event!), write or fax and ask them. You may be able to get a very
satisfying lump sum back payment. For address, see
relevant addresses

Additional Pension

There are two kinds of additional pension:
Graduated Retirement Benefit, relating to the period between 1961 and 1975, and
the State Earnings-Related Pension Scheme, SERPS, relating to the period since
1975. In official literature SERPS is simply called "Additional Pension". Both
of these pensions depend on the amount of earnings on which you paid
contributions. There is no minimum amount; in the official booklet there is even
an example of a woman getting a pension of £1.23 per week!

Contracted Out Pension

If your employer ran a contracted out pension
scheme, or if you had a private pension, you will need to contact the Trustees
or Managers of the scheme. Your previous employers or the Department for Work &
Pensions (DWP) should be able to help you with this.

Widows' Pension

The widow of a British pensioner will usually
inherit her husband's basic pension, plus one half of his graduated pension,
plus a percentage of his SERPS pension. This percentage is 100% where the
pensioner was due to retire on or before 6 October 2002, falling to 50% if the
pensioner was due to retire after 5 October 2010.

Note: SERPS has been renamed "S2P" (State
Second Pension). S2P is a continuation of SERPS under a new name with additional
benefits for some pensioners.

For fuller information write
to: The Pension Service International Pension Centre

Tell them your full name, your
date and place of birth, your National Insurance Number if you know it, your
last place of work in the UK, and which years you worked there. You don't need
to tell them all of that, but the more you tell them the more likely it is that
they will find you in their files. To help you do this, use our form at
Pension entitlement form you can print and post off.

The following is a resume of how
entitlements to a British Age Pension and the Australian Government Pension
relate since the Social Security Agreement between Australia and Britain was
terminated on 1st March 2001.

The Australian age pension is
non-contributory, and it is means tested. British migrants are not
eligible for the Australian pension until they have held permanent residency
rights for 10 years.

You will be disqualified from
entitlement to an Australian pension for as long as your assets and income,
including your British pension, exceed the limits specified in the Australian
means test. Your British Age pension will remain unindexed, i.e., will remain
frozen and you will get no compensation from Australia.

If you arrived in Australia and reached
Pensionable age before 1st March 2001 you would have been entitled to an
Australian pension, subject to the means test. Until you had been a permanent
resident for 10 years, you would have been subject to a special version of the
means test.

The whole of your British Age pension and 50¢ in the dollar
of any other income, would have been deducted from your Australian entitlement, after
taking into account the free area.

The means test

50¢ in the dollar of your British Age
pension and of any other income will be deducted, after taking into account the
free area.

Another result of the termination of the
Social Security Agreement between Australia and Britain is that Centrelink will
no longer issue claim forms for a British pension. It will be necessary to apply
to the British DWP in Newcastle.

If you have worked in the UK and
paid contributions to the
UK Government scheme

You must arrange to draw any British Pension to which you
(and/or your spouse) are entitled from the UK before you will be able to gain
any Australian Pension. To check your entitlement write to the Department for
Work & Pensions. For address, see
relevant addresses

Australian taxation law allows
the Undeducted Purchase Price (UPP) of all pensions originating in the UK to be
taken into account when calculating Taxable Income.

The UPP of any pension is the
total value of all contributions made over the years during which you were
earning entitlement from that fund. This total value is divided by the number of
years during which you are likely to receive payments from the fund. If the
pension is to be paid for life, the term will be based on the life expectancy of
the pensioner, as set out in the Australian Life Tables. If, upon the
pensioner's death, the pension reverts to another person, that person's life
expectancy will be used, if it is longer.

The calculations are made in
Pounds Sterling, the original currency of the pension, while the annual
deduction for tax purposes will be the agreed amount converted into Australian
currency at the average rate of exchange for the year in question.

The UPP deductions can be
applied to all pensions received from the UK, whether private or government. If
you have not claimed this form of deduction on your pension or pensions in the
past, you can backdate your claim for a maximum of 3 years.

Allowance for these deductions
is made in Section 27H of the Income Tax Assessment Act. In order to claim for
UPP deductions you will need to provide documentary evidence of your
contributions. A letter to your Pension Fund Managers or, in the case of a
Government Pension, to the Dept for Work & Pensions in the UK, should get you
all the information you need.

In the case of the UK
Government National Insurance or Age Pension, you also have the option of
calculating the annual deduction on the basis of 8% of the annual pension
received (expressed in Australian currency). This is permitted by Australian
Taxation Office Ruling TR93/13. Generally speaking the 8% option is likely to be
more advantageous, so ask for both options and choose the better.

When applying you will need to
provide the following information: (1) Date of birth; (2) Date pension
commenced; (3) Term of pension, e.g. life, or a number of years. (4) Name and
date of birth of the person to whom the pension reverts upon the claimant's
death, if applicable.

It is well worth making a
claim. Three years back deductions for a pensioner couple can add up to several
thousand dollars, with possibly several hundred a year thereafter.

If you are unsure of how to
make a claim, it might be worthwhile employing a tax accountant. As not all
Australian accountants are aware of these regulations, as they apply to British
Pensioners, you should give them this information.

If you have not yet reached
Pensionable age, you may be eligible to make further contributions and thereby
increase your future pension. Five or six years in arrears may be payable and
you may also be able to pay a number of forward years. Options for additional
contributions become more limited as retirement age approaches, but even after
retirement you may be allowed to make up for earlier years when you did not pay
National Insurance. Note that the DWP will only accept contributions for a full
year or a multiple of full years. There is no advantage to be gained by
increasing contributions beyond a total of 44 years. If you will be entitled to
receive a pension, but your spouse will not, remember to claim for a spouse
pension.

Tell them your full name, your
date and place of birth, your National Insurance Number if you know it, your
last place of work in the UK, and which years you worked there. You don't need
to tell them all of that, but the more you tell them the more likely it is that
they will find you in their files. To help you here you can use our enquiry form
at Pension entitlement form.

Ask them about class 2
contributions. They are much cheaper than class 3. Contrary to what it says in
the booklets, qualification for class 2 is not limited to the self-employed, so
long as you can tell them that you are working.

Two Case Histories

Two cases have been reported to
us of pensioners who were not told by the DWP about their right to make
voluntary contributions. In both cases the pensioners were permitted to make
payments in arrears. In one case the pensioner had his pension increased, and
was awarded a lump sum back payment which exceeded the amount of voluntary
contribution he had paid.

In the other case, a woman was
told that as she had only nine year's contribution before marriage and
emigration, she was not entitled to any pension. She was not told about the
right to make voluntary contributions. Seven years later she found out about the
right to make voluntary contributions and lodged a complaint. She was permitted
to make contributions for six years in arrears, thus acquiring a pension of 35%
of the standard rate. She has also received a lump sum in back payment, more
than she paid in voluntary contributions.

Are you aware that it is
possible for a Pensioner resident overseas with a frozen pension to claim
uprating for the duration of your visit when visiting the United Kingdom and a
number of (but not all) other countries where UK state pensions are uprated?

We urge you to do so, even if
the claim only amounts to "a bob or two". We present this information to enable
frozen pensioners to claim uprating for the period during which they may be
fortunate enough to visit certain countries. As a result of enquiries made to
the UK Department for Work & Pensions (DWP), readers should note the list of
countries where this applies; it is considerably longer than most people realise.

Have a look at CF(N)701.pdf. The following
text may be easier to read.

EUROPEAN COMMUNITY MEMBER
STATES

The countries where your
pension will be uprated are United Kingdom, European Community States, and any
of the countries listed below:

UPRATING CLAIMS ARE NOT
ACCEPTED FOR VISITS
TO CERTAIN OTHER COUNTRIES:

The DWP also advises
that, although there is a reciprocal
agreement to pay uprating to pensioners ordinarily resident in the USA,
the agreement precludes the payment of uprating if you are simply visiting. Also
specifically excluded in their own reciprocal agreement, for some mysterious
reason, is Bermuda. Some editions of leaflet CF-N-701
also exclude Jamaica.

If you temporarily visit those
countries from any frozen country you will not receive the uprating.

DON'T MISS OUT ON MAKING A
CLAIM

Even if you are only visiting
for a day or two, you should file a claim with DWP to receive your uprating. The
current rules (which keep changing) state that a claim must be received within a
month of your arrival in the UK, or other qualifying country. In our experience
it is safer to tell them before your visit.

Here is the latest advice from the pension
service. as you can see, they are less formal in their approach than they used to
be.

Thank you for contacting the
International Pension Centre with your email dated 24 March 2010.

There is now no need to complete forms,
you can apply be e-mail and we will call you back or telephone us directly.

You can apply for an increased rate of
benefit whenever you are in the United Kingdom (UK). We will need to know:

· your full name

· the date you are arriving and
the date you are leaving

· your nationality

· an address and telephone
number where you will be staying during your visit.

We cannot take this
information any earlier than 4 weeks before you arrive in the UK. You must tell
us about your visit within 28 days of your arrival in the UK if you do not do so
before your arrival.

If you give us this
information by e-mail within the time limits, we will contact you by telephone
within the next 5 working days to confirm the details you have provided. For the
security and protection of your personal details we will also need to verify
your identity before further action can be taken and any changes implemented.

If this is not convenient
you can call us on +44 191 218 7777 between the hours of 8am and 8pm (United
Kingdom time).

The only problem here is that Ken does not mention
that you can get the upgrade while travelling in uprated European countries and
in some of the uprated non-European countries. (But not for travel in USA)

HRP was introduced in the tax year beginning April 6th
1978 and can only be allowed for complete tax years . The purpose was to
compensate mothers for staying at home to bring up their children so that they
didn't lose out when assessing the number of years worked for their Old Age
Pension calculation.

HRP is also available for years spent looking after sick
or disabled persons.

It is supposed to be automatic for women who receive
Child Benefit, but in accordance with usual policy, nobody don't tell you
nothing!

If a man has a basic pension (*) from the British
National Insurance Scheme, he can get an additional pension for his wife. It
does not matter if his wife is not British and has never worked in Britain.

If the wife has not yet reached retirement age (*) the pension is an adult
dependant supplement+. It is work tested and income tested. It is paid to the
husband in addition to his own pension.

If the wife has reached retirement age then the pension is called "category
B" and is paid to the wife. It is not means tested.

Be aware that DWP does not automatically convert a dependant supplement to a
category B pension; it is necessary to apply.

The pension is in both cases almost 60% of the husband's basic pension.

(*) Basic pension is part of the total state pension. The husband may have a
graduated retirement benefit (grb) and an S2P pension, but neither of these
attracts a wife pension.

(*) Retirement age for a woman born before 1950 is 60. For women born after 1955
it is 65. For women born between 1950 and 1955 it is on a sliding scale.

(+) Adult dependant supplement, also called adult dependant
increase, is being phased out. No new awards were made after 6 April 2010,
and all such increases will stop in 2020.

Where a woman has a pension in right of her own
contributions, and it is less than 60% (approximately) of the standard pension
rate, then her pension and the
category B pension will be added together to give a "composite
pension", but there is an upper limit; she cannot get more than the current
standard category B pension.

If she gets her own pension at age
60, the DWP may forget to tell her about category B pension when her husband
turns 65.

Many people
think the above statement is true, and therefore freezing of pensions does not
matter. They think that if their UK pension is indexed each year the Australian
age pension will be reduced by the same amount as the UK pension is indexed.

This is simply not true.

To
illustrate this, let’s take an example of a man who earned a full basic pension,
and then retired to Australia in 2000. His basic pension will be £67.50 and
frozen at that. If he has no other income but has an Australian pension the sums
will be as follows (based on April 2012 Australian pension rates.):

Note: All the figures on
which this table is based vary from time to time, especially the exchange rate.
But the principle is still the same; you would be better off if your UK pension
was indexed.

UK
pension

£67.50
per week

Dollar
amount per fortnight

$205.20
per fortnight *

Means
test threshold

$150.00
per fortnight

Excess
(205.20 - 150)

$55.20

Reduction in Australian pension (50% of excess)

$27.60

Australian pension, single rate.

$695.30
per fortnight

Total
pension (205.20 + 695.30 – 27.60)

$872.90

* assuming conversion rate £1 = $1.52

If the freezing regime ended, the sums would be as follows:

UK pension

£107.45
per week

Dollar
amount per fortnight

$326.60
per fortnight *

Means test
threshold

$150.00
per fortnight

Excess
(326.60 - 150)

$176.65

Reduction
in Australian pension (50% of excess)

$88.30

Australian
pension, single rate.

$695.30
per fortnight

Total
pension (326.60 + 695.30 – 88.30)

$933.60

So you would
be $60.70 per fortnight better off.

These figures
are based on the single rate. The figures for married couples will be
different,
but the pattern will be the same. You will be better off !

You would not lose your pensioner card nor any of the fringe benefits that go
with the pension. Even if you have a SERPS pension and the indexation takes you
over the upper limit, and as a result you lose your pensioner card, you will
still be eligible for the Commonwealth Seniors Health Card and many of the
fringe benefits.

What would happen if I decided to move back to Britain for permanent residence?

You
would, of course, at first receive full uprating as if you were on a visit. But
this would not be permanent, unless you established that you intended to settle
there permanently. There is nothing automatic to say that after so many months
you would be treated as a resident and keep your uprating on returning to
Australia. Everything is in the hands of a Decision Maker,

This is
the advice extracted from a letter received by a frozen pensioner in answer to
his question on this subject.

If you
were to return to the UK your State Pension would be uprated from the payday
following the date of your return.

With
regards to keeping your payments at the same rate, should you wish to return to
Australia, there are many factors to be taken into consideration. Each case must
be considered on its own circumstances. Whether an individual has become
resident or ordinarily resident in the UK is a question of facts and degree.

Although each case is treated individually there are a number of factors which
are commonly considered by the Decision Maker. I have bullet pointed these for
your ease of reference:-

A
person' stated intention is relevant, even if they later change their plans

If
their personal circumstances unexpectedly change

If the
person stated their plans changed unexpectedly and they then left the UK, the
Decision Maker would look at the case to determine whether the arrangements they
had commenced in the UK supported that their original intention was to remain in
the UK

The
type of accommodation in the UK is an important factor, and whether they give up
their property in the other country.

The
Decision Maker would also look at whether any personal possessions were shipped
to the UK, and what the person did with the remainder

Other
factors such as registering with a doctor and dentist would be considered as
part of the overall picture.

There
is no mechanism in place to enable you to keep your UK rises while resident in
Australia, unless you are classified as ordinarily resident in the UK and only
visiting Australia.